Kevin Drum

Down the Drain With the Tea Party

| Thu Feb. 24, 2011 11:28 AM EST

Here's the latest from those well-known socialists at 85 Broad Street:

Spending cuts approved by House Republicans would act as a drag on the U.S. economy, according to a Wall Street analysis that put new pressure on the political debate in Washington. The report by the investment firm Goldman Sachs said the cuts would reduce the growth in gross domestic product by up to 2 percentage points this year, essentially cutting in half the nation's projected economic growth for 2011.

....A spokesman for House Speaker John A. Boehner of Ohio said the Goldman Sachs report represented "the same outdated Washington mind-set," comparing it to the thinking behind the 2009 Recovery Act that released federal funds to counter the effects of the recession.

I don't know about Goldman, but Boehner sure seems to have the traditional GOP mindset down pat: if inconvenient evidence is at hand, pretend it doesn't exist.

In fairness, I have to say that two percentage points seems pretty high to me for $100 billion in budget cuts. Still, even Douglas Holtz-Eakin, who sold his soul for the cause years ago, agrees that the tea party-inspired cuts in the House bill would cut 0.2 percentage points off of GDP growth. That's probably too low, but it almost doesn't matter: if even Republican house economists agree that the cuts would slow economic growth at all, tell me again why Republicans are insisting on them?

Advertise on

Quote of the Day: Shutting Down the Government

| Wed Feb. 23, 2011 2:51 PM EST

From Jamelle Bouie, writing about the possibility of a tea party-inspired government shutdown next month:

Compared to 1995, today's GOP is far more anti-government and far more ideological than it was under Gingrich.

For anyone who live through that era, this is hard to believe. But it's true. It's also true, as Jamelle says, that a shutdown would pretty quickly lead to real consequences for real people: "This was damaging enough in 1995, when the economy was in the middle of an unprecedented expansion. Today, with slow growth and double-digit unemployment, it would be catastrophic." Yes it would. See David Leonhardt about the austerity programs in Germany and Britain for more about that.

James Galbraith on Countervailing Powers

| Wed Feb. 23, 2011 1:14 PM EST

My magazine piece on the decline of labor was all about labor's role as a countervailing power against the corporate community. The concept of countervailing powers is, of course, the brainchild of John Kenneth Galbraith, and today Ezra Klein talks to his son, James Galbraith, about how this applies to the world today:

What if labor never gets off the mat, and initiatives like the one in Wisconsin succeed? Are there any other actors in the economy who can play the countervailing role that labor has traditionally played?

There are certainly other organizations in the system. Voluntary associations and churches and so forth. But there’s nothing able to play the role as effectively on economic issues as an organization based on economic roles. Everything else is divided up into particular concerns — many of which are very important, like civil rights and environmental issues. But what has faded out is an organization with a clear and coherent focus on the economic position on the working population. And not the working population composed of manufacturing workers, but the mass of service sector jobs and others who are not organized.

This is a very good way of putting it, and it's similar to a few paragraphs I wrote for an early draft of my article. The left still has plenty of interest groups, and they play important roles. But most of the best funded groups don't really focus strongly on economic issues, and most of the groups that focus on economic issues aren't well funded. As I put it in the article, we lack a countervailing power "as big, crude, and uncompromising as organized labor used to be." Somehow we need to figure out how to get that back.

Obama Reverses Course on DOMA

| Wed Feb. 23, 2011 12:52 PM EST

The Obama administration has decided to stop defending Section 3 of the Defense of Marriage Act, which defines marriage for federal purposes as only between a man and a woman. This is from the Dept. of Justice statement:

After careful consideration, including a review of my recommendation, the President has concluded that [...] classifications based on sexual orientation should be subject to a more heightened standard of scrutiny. The President has also concluded that Section 3 of DOMA, as applied to legally married same-sex couples, fails to meet that standard and is therefore unconstitutional. Given that conclusion, the President has instructed the Department not to defend the statute in such cases. I fully concur with the President’s determination.

Consequently, the Department will not defend the constitutionality of Section 3 of DOMA as applied to same-sex married couples in the two cases filed in the Second Circuit.

This, by the way, is a good example why I've never joined in the general condemnation of conservatives for "reigniting the culture wars" whenever they introduce an abortion bill or somesuch. I'm on the opposite side of these conservative efforts, of course, but the fact is that liberals started the culture wars in the 60s and it's something we should be proud of. So while I oppose the conservative side of the culture wars, I approve of the culture wars in general, and I applaud Obama and Holder for reigniting it last year when Congress repealed Don't Ask Don't Tell and for reigniting it in the case of DOMA today. Blacks, Hispanics, gays, women, the disabled and millions of others have benefited tremendously from the culture wars, and I'm happy to see it continue until there's no more war to fight.

The Worm Turns in Wisconsin

| Wed Feb. 23, 2011 11:58 AM EST

What's the endgame in Wisconsin? Andy Kroll rounds up the possibilities today, and outcome #1 is that eventually the union busting bill passes. This has seemed the most likely outcome to me from the start. Gov. Scott Walker has run a very disciplined operation so far, he has a lot of leverage and doesn't seem afraid to use it, he's taking on an unpopular target, and Democrats can't hide out in Illinois forever.

But I've been a little surprised at how things have turned out so far. Democrats might not be able to hide forever, but it turns out they can hide for a good long time. Even more important, it turns out that Walker's position may not be as popular as I thought. A national Gallup poll yesterday showed that 61% of Americans don't favor taking away collective bargaining rights from public sector unions. This doesn't mean teachers unions are suddenly everyone's heroes, but it does mean that a sizeable number of people think that busting unions entirely is a step too far.

And then there are Walker's fellow Republicans. One of the big questions swirling around the situation in Wisconsin is the notion that it's a bellwether: if Walker wins, will other Republican governors follow suit? There's still no telling, but just yesterday both Indiana's Mitch Daniels and Florida's Rick Scott have spoken out against the idea of eliminating collective bargaining rights. Their statements were mild, but they still take a bit of momentum out of Walker's anti-union crusade.

Even if unions lose the battle in Wisconsin, one benefit of their protest is to show other Republican governors that they're in for a pretty serious war if they try to do the same thing. That's worth a lot all by itself.

Buying Justice

| Tue Feb. 22, 2011 5:08 PM EST

Paul Waldman notes that New York state's chief justice recently announced that judges have to recuse themselves if a lawyer arguing a case before the court has contributed more than $2,500 to one of the judge's campaigns. You'd think that should have been obvious all along, wouldn't you? But not to everyone:

It's true that the ability to buy a judge is not completely without limits, as we found in a case called Caperton v. Massey, involving the notorious mining company Massey Energy. Massey had recently been hit with a $50 million verdict in a lawsuit heading for West Virginia's Supreme Court of Appeals, so the company's chief, Don Blankenship, poured $3 million into the campaign of Brent Benjamin, a private attorney running for the first time, for chief justice in 2004. That amount was more than both campaigns spent combined. Benjamin ousted the sitting justice, and when the case reached the high court, Benjamin refused to recuse himself and cast the deciding vote in Massey's favor, tossing out the $50 million award.

When the appeal reached the Supreme Court of the United States, the Court ruled that Benjamin should have recused himself. But what was so remarkable about the decision is that it wasn't 9-0 or 8-1 but 5-4. Justices John Roberts, Antonin Scalia, Clarence Thomas, and Samuel Alito — the Court's conservative bloc — actually thought it was OK for a judge to get $3 million from a defendant, then rule on that defendant's lawsuit.

This, of course, is the case that inspired John Grisham's The Appeal, which I highly recommend. Sure, it's Grisham, and I know he's not everyone's cup of tea, but The Appeal is great liberal porn and it only takes a few hours to power through. You'll enjoy it.

Advertise on

The Opposite of Wisconsin

| Tue Feb. 22, 2011 2:02 PM EST

Jon Chait imagines a Democratic governor proposing a deficit reduction plan in a Bizarro-world version of Wisconsin:

Imagine a Democratic governor proposed a plan to close a budget crisis. First he jacked up the Earned Income Tax Credit. Then he proposed a tax hike on the rich and on corporations to close the deficit. And then he packaged it with a stringent campaign finance law, a law to require corporations to obtain permission from shareholders before engaging in any kind of political activism, and other laws designed to crush the political power of corporate America. (Pro-Democratic businesses would be exempted.) It's budget-related, because, after all, you can't maintain higher taxes on the rich if the rich are able to bend the political system to protect their interests. Oh, and Republicans accepted the tax hikes on the rich but opposed the other provisions, but Democrats refused to negotiate them.

I suspect conservatives would interpret this not as a genuine effort to close the deficit but as an exercise in class warfare and raw politics. They'd be correct.

It's all about power, baby, power. Scott Walker knows exactly what he's doing. For more on what the rich have to gain or lose in this battle, take a look at the great set of charts from Dave Gilson and Carolyn Perot that accompany my union piece today. It's called "Eight charts that explain everything that's wrong with America," which might be stretching things a bit. I can think of a few other things wrong with America too. But they're a pretty good start.

Free Oil!

| Tue Feb. 22, 2011 1:01 PM EST

When the price of oil goes above a certain benchmark level, companies drilling on American territory in the Gulf of Mexico are supposed to pay royalties to the United States government. Which is to say, royalties to you, the taxpayer. Unfortunately, a bureaucratic snafu accidentally gave away some leases for free a few years ago, and ever since we, the taxpayers, have been receiving no royalties on those wells. But that's no problem, right? Our elected representatives in the United States Congress will just fix the error. Matt Steinglass explains the facts of life:

As of 2008, the bill came to $1.3 billion; this year, the losses will be $1.5 billion. Over the decades-long lifetime of the wells it'll add up to a lot more. According to the Government Accountability Office it'll come to $53 billion over the next 25 years. Last week, representative Ed Markey and a few other Democrats on the House Natural Resources Committee offered an amendment to the Republican budget bill to make those oil producers pay the standard amount in the future on the royalty-free leases they mistakenly received due to bureaucratic error. The amendment was voted down, 251-174.

Life is good when you own one of America's two political parties, isn't it?

Unions and the Rich

| Tue Feb. 22, 2011 12:29 PM EST

Here's another take on why even public sector unions matter in the fight against the corporatization of the political economy. The chart on the right, from John Sides, shows the overall union density for each state on the X-axis, and this is probably a fairly decent proxy for the level of public sector union density too. He concludes that unionization has essentially no effect on state budget deficits, but Matt Yglesias makes a different and equally salient point:

Looking at this chart, what I think you would see is that unionization levels have a strong relationship to progressive taxation. New York, Hawaii, and Washington are all high-tax states, especially on rich people, while the non-union south has generally low levels of taxation and regressive tax structures. The conservative movement is financed by rich people whose primary interest in life is lower taxes. And on an intellectual level, the main wellspring of conservative economic policy ideas comes from people who believe that progressive income taxes are very economically damaging. A secondary intellectual inspiration is people like Greg Mankiw who believe that such taxes are an immoral imposition on a genetic elite. A key problem with this agenda is that higher taxes on rich people are a politically popular way to solve budget deficits. The solution is to create a dynamic in which political parties are entirely reliant on rich businessmen for their financing. Reducing labor unions to a state of political impotence will get the job done.

Italics mine. Needless to say, for more on this you should read my piece about the role of unions in the American political economy, which went online today. It's good! I promise.

The Stakes in Wisconsin

| Tue Feb. 22, 2011 11:52 AM EST

Yesterday I wrote that the decline of unions over the past three decades "has left corporations and the rich with essentially no powerful opposition." Megan McArdle wonders, reasonably enough, what this has to do with Wisconsin:

In what way do public sector unions act as a check on the power of corporations? They are not negotiating against corporations; they are rarely competing with corporations (and certainly not in the case of the teachers' unions); and corporate taxes do not provide the bulk of the revenues for state and local governments.

It is surprising to me how determined both conservatives and liberals seem to be to view this through the lens of the private sector union fights — exploitative corporations and militant workers have been neatly transmogrified into selfish taxpayers and greedy unions.

My union sympathies are much stronger in the private sector than the public sector, primarily because I do indeed think the biggest value of unions is the fact that they act as a bulwark against unfettered corporate control of the political economy. But that doesn't mean this is the only benefit of unions. I also value unions for moral reasons: workers should have the right to effectively bargain with management over wages and working conditions no matter who management happens to be. Taxpayers can act unfairly just as easily as any other employer. And I value them for purely economic reasons: workers should be paid decently no matter who they work for and unions help make that happen. And for reasons of solidarity: the death of public sector unions will only hasten the further demise of private sector unions too. And for reasons of partisan hackery: public sector unions provide considerable support for the more liberal of our two great political parties.

There are some pretty reasonable arguments to be made against public sector unions, prime among them the fact that they exert a lot of control over the politicians who act as "management" in bargaining fights. To some extent this means they get to bargain against themselves, and taxpayers can sometimes end up with the short end of that stick (though see Jon Chait for the other side of this claim). For this reason, I'd support a ban on public sector unions contributing to political campaigns if the same rules applied to corporations and the rich. But they don't, and they never will.

For better or worse, then, I support public sector unions as well as their private sector counterparts. It's not a perfect world we live in, but bargaining for wage gains and decent working conditions is something that everyone should be allowed to do. Working for the government doesn't suddenly mean that right should disappear.